The Malaysian federation was founded in 1963. It consisted of the Federation of Malaya, Sabah, Sarawak and the State of Singapore. Singapore separated from Malaysia in 1965.After gaining independence, the Malaysian Federation faced a necessity to expand the economy. The country shifted from the policy of export of primary natural resources and agricultural products to establish itself as a rapidly industrializing country with a diversified export base.
In the mid-1960s, Malaysia established 5-year planning, targeting certain areas of economic growth and social changes, and allocating public resources for priority sectors of the economy and for infrastructure development. Despite these efforts, the government was reluctant to institute centralized control over the state's economy. The 5-year plans became a basis for official development strategies.
The Government of Malaysia encouraged the free market with limited state intervention and export oriented industrialization. The exports to the International Market were used to make judicious use of the country's resources and generate currency needed for the development of technology and innovation.
The structure of the Malaysian economy has witnessed tremendous change in the last 2 decades. According to the World Bank, the proportion of manufactured production grew from roughly 20 percent of Gross Domestic Product (GDP) in the early 1980s to 31.5 percent of GDP in the late 1990s. Manufactured products accounted for around 85 percent of gross export earnings in 1999, with electronic goods becoming one of the most important products.
The role of mining has decreased in the last few decades. (Malaysia was one of the world's largest exporters of tin in the 1970s), now contributing just 7 per cent of GDP. Malaysia continues to export tin, gold, bauxite, ilmenite, oil and gas. The role of agriculture has also been declining. In spite of this Malaysia is one of the world's leading exporters of rubber and timber and produces nearly half of the world's palm oil. Tourism is also an important and rapidly growing sector of the economy.
Malaysia has a very diverse economy. The manufacturing sector is dominated by large Multinational Corporations, with a heavy Japanese presence are among the largest companies. In the service sector, especially in the retail trade, large international superstores like Marks and Spencer, SOGO and Yaohan are complemented by a number of medium and small enterprises. Due to rapid economic prosperity, in certain sectors Malaysia has witnessed a shortage of labor.
Last Updated on: 18-11-2009
